CORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 664-ii

House of COMMONS

Oral EVIDENCE

TAKEN BEFORE the

Public Administration SELECT Committee

Future of the Civil Service

Tuesday 15 January 2013

Professor Andrew Kakabadse, Dr Chris Gibson-Smith, Sir John Elvidge and Dr Suzy Walton

Evidence heard in Public Questions 83-132

USE OF THE TRANSCRIPT

1.

This is a corrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee, and copies have been made available by the Vote Office for the use of Members and others.

2.

The transcript is an approved formal record of these proceedings.

Oral Evidence

Taken before the Public Administration Committee

on Tuesday 15 January 2013

Members present:

Mr Bernard Jenkin (Chair)

Charlie Elphicke

Paul Flynn

Robert Halfon

Kelvin Hopkins

Priti Patel

Mr Steve Reed

________________

Examination of Witnesses

Witnesses: Professor Andrew Kakabadse, Professor of International Management Development, Cranfield School of Management, Dr Chris Gibson-Smith, Chairman, London Stock Exchange, Sir John Elvidge, former Permanent Secretary, Scottish Government, and Dr Suzy Walton, former senior civil servant at the Cabinet Office, gave evidence.

Q83 Chair: Welcome to this second session of our inquiry on the future of the Civil Service, which you did not read about in The Times yesterday. Could you each identify yourself for the record?

Dr Walton: I am Suzy Walton, formerly of the Cabinet Office, with a nonexecutive portfolio on various boards.

Sir John Elvidge: I am John Elvidge, formerly Permanent Secretary to the Scottish Government, and now Chairman of Edinburgh Airport Limited.

Professor Kakabadse: I am Andrew Kakabadse, Professor at Cranfield School of Management.

Dr Gibson-Smith: I am Chris GibsonSmith, Chairman of the London Stock Exchange and the thinktank Reform.

Chair: Formerly you led the turnaround of the National Air Traffic Services.

Dr Gibson-Smith: Yes, I led the privatisation of NATS.

Q84 Chair: Thank you all for being with us. Could I ask you, first of all, what you think is going wrong with the Civil Service? What is the fundamental problem? We see lots of symptoms, but what do you think the underlying cause of the problem is?

Dr Walton: I would not necessarily say that there is anything going wrong. There is a dialogue that seems to have gone wrong between the politicians and the civil servants. We have seen the sort of reform plan that we are seeing now through successive Governments. It is almost like the new Administration have come in and completely forgotten what has gone on before in terms of reform. There seems to be an inaccurate dialogue, in my view, going on at the moment, and too much has been made of the problem. We largely have a Civil Service with enormous merits and politicians with good motives. Everybody is trying to make public services better. That seems to have been lost a little bit in the debate. We are seeing a lot of noise about a problem that, in my view, has been completely misinterpreted. We have excellent motives on both sides of the fence; the politicians and the civil servants should not be on opposite sides of the fence. The reform plan calls for more business methodology and we need that business methodology to see how to improve business on both sides of the fence and make the machinery of government work a little better. I do not see it as a deficit model that is broken and needs to be fixed.

Q85 Chair: In your evidence, you said that the Civil Service needs to reform the capacity of civil servants for strategic thinking.

Dr Walton: I did.

Chair: You said that lessons can be learnt from a Cabinet Office programme of work under the previous Government, entitled "Strategic Futures". You said that, to deliver a business culture we need civil servants to be trained to be directors by the IOD. You also said that there is no magic bullet, but you did not say that there is nothing fundamentally wrong.

Dr Walton: No, Chairman, but what I did say was that I did not feel the Civil Service needs radical reform, but it needs reform. I stick by that. I do think we need greater capacity for strategic thinking. We need senior civil servants to be trained in a slightly different way. We need to have a fixed place within government that does horizon scanning and strategic thinking. We do need to tweak the machinery of training. I very much stand by the qualification that I left Whitehall in order to obtain, that of chartered director, which I see as being something that would fit some civil servants to better do their job. I do not see the system as being in need of radical reform, but reform, yes.

Sir John Elvidge: So that you do not correct me, Chairman, by taking me back to my written evidence, I had better start there and go to the core argument in my written evidence. That is that, if we step back from Whitehall and look at essentially the same Civil Service functioning in different settings, the evidence would suggest that it is not correct to diagnose this as an institutional problem. It would be more accurate to say that what we are seeing is a breakdown of relationship in the context of the UK Government-or a breakdown of relationship in some places. I am not sure that one sees a uniform picture across Whitehall in the way in which individual Secretaries of State feel about the way in which they are served.

Q86 Chair: So if you were Head of the Civil Service how would you go to the Prime Minister and say to him, "I know you think there are lots of things wrong with the Civil Service, but actually it is our relationship that has gone wrong"? How would you say that?

Sir John Elvidge: I think what I would say is, "I think there are some ways we can fix this. There is no point denying that we have tensions and lack of confidence from some of your Secretaries of State and the civil servants supporting them. I believe that we can fix this if you allow the leadership of the Civil Service to take responsibility for fixing it and take the action."

Q87 Chair: So it is about trusting the civil servants?

Sir John Elvidge: It is about giving the civil servants a period of time to fix it and holding them to account for whether they succeed or not.

Professor Kakabadse: I agree with my colleagues that in fact both sides, civil servants and politicians, are concerned with providing public service, but I do believe there is a need for radical reform. I do believe there is an institutional concern. I do not know of any organisation in the world that would have some of the structures and practices that we have here. The fundamental problem we have is that, on the one hand, costs need to be cut, for good reason, and on the other hand quality of service needs to be enhanced and improved to the best we can do with it. In a sense we have incompatible strategies sitting side by side. In that sense you need a level of strategic leadership to try to pull together and integrate what are interesting tensions.

If you start at the top and look at the governance structures, I do not know of any structure in the world that would split strategy from operations. If you go and look at the number of Secretaries of State that are chairmen and are not turning up to meetings, I do not know where that happens either. Equally, if you then have a situation with a much more centralised approach to policy and strategy planning, you undermine the role of the Permanent Secretary. Then you begin to cascade down something that I am beginning to detect: an ever eroding level of trust. If you are going to have strategies that are difficult to pull together, you need management who have high levels of trust in each other, in their abilities and also in their roles. I am finding that the role structures are not compatible with what is being asked of the Civil Service at this moment in time. So I disagree with my colleagues, and I say that we do need to look at exactly what is happening right now.

Then take the issue of the Permanent Secretary and the fast track movement. My own studies on transitions-how long it takes one top manager to transit effectively into a role-show that, even when they know the organisation, it takes about 12 to 18 months. If you are a chief executive who has been appointed into a different industry or different organisation the average transition time is between 28 and 32 months. If you take it at the opposite end, and look at how long it takes to build a culture that really works and binds us all together-so that we can have service together with a more transactional way of operating, to cut costs and achieve particular targets-then you need people in post for five to seven years. Do we have that?

My concern is that we have a strategic leadership problem, we are not addressing it, we are denying what is happening and we should seriously look at this from top to bottom. My major concern is that the governance structures that we have right now are undermining the building of trust.

Chair: That is very clear, thank you.

Dr Gibson-Smith: I would recommend the answer you have just heard. Reform and change of any size of organisation is, in my own experience, without exception, extraordinarily difficult. It is always met with resistance, always requires leadership and always requires the development of new skills. Finding it difficult is actually a normal place to be. The only way in which one transitions through the challenges is through constancy of leadership and purpose, upgrade of underlying skills and clarity of objective. Those have to be sustained through time. The shortest time in which I personally have ever effected substantial change in relatively small organisations, compared with government, is four to five years. That is four to five years of constant upgrade, conflict, interaction and realignment. I have never effected it without engaging the people I was attempting to transform to ultimately do it for themselves.

Q88 Chair: You will each have seen The Times yesterday, which had a big spread, not so much about Civil Service reform, but showing expressions of anger and frustration among Ministers, advisers and commentators that somehow the Civil Service is letting down the coalition. What was your reaction when you read this piece?

Professor Kakabadse: My reaction was that it was understandable but not accurate. I conducted a study of Ministers, and I would draw on Lord Hennessy’s evidence from your last session where he talked about the confident Minister. Certainly the Minister may be confident in Parliament, in their own Party and with their own constituency, i.e. the political processes. My own study looked at the Blair Government and showed that for an array of Ministers and Secretaries of State, to a man or woman, when it came to strategic leadership there was high inadequacy. So the capacity to lead through some of these reforms at ministerial level was seriously wanting and it was not being examined.

First of all I would have to ask whether the Ministers themselves are partly responsible for creating this situation. Secondly, I do not find that the civil servants themselves lack strategic leadership; it is that they are not given the opportunity to exercise it. If at ministerial level the leadership that is necessary and has been built into the structure is not forthcoming, and if the structure itself is undermining the civil servants in practising and apply their leadership skills, then of course there will be frustration. But the problem does not lie with the civil servants; it lies across an institutional basis and until this is examined, the same problems and frustrations will occur time into the future.

Q89 Chair: What would be your reaction if you found that The Times had been significantly helped with the story by advisers from within Downing Street?

Professor Kakabadse: My reaction would be that in a sense it is understandable, but we do not understand the problem we are dealing with. We really do not appreciate the concerns we have in front of us. If we did, those sorts of stories in The Times would be positioned quite differently.

Sir John Elvidge: I broadly share the view that what we read was unsurprising. I have no doubt that the anger and frustration are genuine, but I think it is a manifestation of something that people who have been around in government for a long time will have seen more than once over the years. It is a conflict of understandings about roles and a conflict of expectations that does not get resolved in some places. The way I might describe that is as a conflict between the idea that the Civil Service is there as a set of passive agents-that they are a private army to take instructions-and the idea that government is a partnership between the skills of politicians and the professional skills of civil servants. The more one leans towards the private army approach, an approach I thought was evident, for example, in Steve Hilton’s quoted remarks from Stanford, the more one is going to run into the kind of problems that Professor Kakabadse was just describing, of not creating the space in the relationship for a proper dialogue to take place and both sets of skills to be utilised in a partnership to deliver beneficial public outcomes. It is that conflict of expectations that we are seeing reaching boiling point.

Dr Walton: Chairman, you asked us what our reaction was to what was in The Times, and you implied that some of the comments might have been spun a little bit. My reaction, reading The Times, was one of some pleasure to see that it was going to be redressed slightly today by allowing the civil servants to have some say. Indeed, when you look at both sets of press copy together, a different story plays out. I always get slightly upset reading the sorts of press we had yesterday because you are not seeing the issues laid out with any evidence, and you are not necessarily seeing the right witnesses address the points. I am not undermining the points made, but it serves the purpose of getting the public and certain people very excited. It is not the kind of debate we want to see about these issues. We want to see the kind of debate that you are chairing with this inquiry. What we saw in the press yesterday was very misleading. What we saw in the press today was slightly misleading but somewhat balanced the picture a bit. So I do not think people should look to either of those press copies to see what the real issues are. The real issues are going to be pulled out in much slower time by this inquiry and by other mechanisms.

Q90 Chair: Do you think the article in The Times looked like a Downing Street operation or a semiofficial Downing Street operation?

Dr Walton: As will often happen with stories of that nature, I think the people who gave quotes had given much wider quotes, and soundbites were selected that suited a particular slant for the story.

Dr Gibson-Smith: I felt it was unlikely to be helpful in furthering the real debate it sat on top of. My own view is that, as a society, we need a proper balance of political and administrative capability. They are separate goods for our society. They have constitutional places that need to be thought about quite profoundly, and political objectives are inevitably different from administrative objectives. In my own experience of the privatisation of the air traffic service, which I did because I had intended to do public service after I retired from my first life role, I was balancing the needs of the delivery of the service with the needs of the CAA, the needs of the Treasury and the needs of the transport. We were all aligned in our intention to privatise the service, but actually, when you got into the detail, every single one of those groups had different objectives. The task was actually resolving the differences in the objectives. It was immensely difficult, even within the relatively simple context of a single service within government. These are not easy tasks.

Q91 Chair: Of course, in your position you had the ability to say, "If you are not going to co-operate I will go and do something else".

Dr Gibson-Smith: That is probably helpful, but I had a deep intention to be successful. My prime role was managing the interface between the different needs.

Q92 Robert Halfon: I would like to go back to this issue about trust between Ministers and civil servants. There was a recent case in the Department for Education where the Secretary of State and the special adviser were alleged to have been using private e-mails to communicate with each other, because there were things they did not want the civil servants to see. It became the subject of a freedom of information inquiry by the Information Commissioner. Does this not illustrate that trust between civil servants and Ministers has broken down, if the Secretary of State and his special adviser do not feel they can communicate openly on departmental e-mail?

Sir John Elvidge: Personally, I would not have said so. It is entirely right that Ministers and special advisers should have some private space in which they can have a political conversation. I sometimes think of organisations as the equivalent of a functioning mind. Most of us would not like every single thought we have to be shared with a wide audience. As human beings we go through a process of internal dialogue and then share some of the conclusions of that internal dialogue. The trust issue certainly exists, but I do not see this as a symptom of the trust issue, up to a certain point. Once one is past the point where there is ostensibly a delivery partnership between Ministers and civil servants, if one persists in having a dimension that does not share information inside that partnership, then one is beginning to come into an area of dysfunctionality.

Q93 Robert Halfon: If what you are saying is correct, then it was perfectly right to have a private conversation. Was it then right that the Information Commissioner said that these should be subject to freedom of information?

Sir John Elvidge: As a matter of general policy I would never criticise the Information Commissioner’s conclusions.

Chair: Oh yes, we would.

Sir John Elvidge: You would, but I wouldn’t.

Robert Halfon: You must have a view. I am asking whether you think it was right or wrong, given what you have just said.

Sir John Elvidge: My general view is that, in the whole of our regime about freedom of information, there should be more respect for the necessity for a private space somewhere.

Q94 Robert Halfon: Can I take your view on this, Dr Walton?

Dr Walton: I hear what you are saying and they are very serious allegations. None the less, I am looking at it within the context of a very large system. Given the number of transactions that have to occur within government, and therefore the amount of communication that goes from A to B, I am not surprised that a proportion will not be conducted as perhaps one would like them to be conducted. I sit on many different boards in different sectors, and I uphold corporate governance. I am a chartered director; I know exactly what I like to see. On every single board and in every set of interactions, particularly between chairman and chief executive, there will always be a proportion of interactions that are not as they should be. One has to tolerate a certain amount of interactions that are not as they should be. That does not excuse this particular incident, and it is very serious, but what I am saying is that one has to always see these things within a system of complexity. You are alluding to the question of whether it hints to a complete breakdown of trust. I think it does not. The incident was possibly wrong but nonetheless, within the amount of business being transacted, one is going to see certain things not operating as they should, no matter what standards one is trying to work by.

Q95 Chair: Just to be clear, what do you regard as the serious allegation? I do not quite understand. Was it the fact that Ministers and advisers wanted to converse privately by unofficial e-mail? Is that an allegation you are making against them, or are you making the allegation that the senior Civil Service wanted to get a grip of this and know what was going on in it? What do you refer to as an allegation?

Dr Walton: In an ideal world, there should be completely open communication.

Q96 Chair: So you are saying the opposite of Sir John. He is saying that there has to be some private space for private interactions and you are saying that these are improper.

Dr Walton: I view it slightly differently. There have to be very clear boundaries within which one can conduct private conversations. With a board, you would generally have a session of the board without the executive members of the board being present. In a complex organisation you would normally have a mechanism for formal communication and you must not break those rules, but then you would create a separate space to have those other conversations. Occasionally, people are taking business that should be conducted in the public space into the private. I do not think that is right but sometimes people do get it wrong. I tend to believe that people do make mistakes but sometimes it is not intended. What one can never fully understand is the intention.

Q97 Robert Halfon: One of the reasons why this business in the Department for Education is alleged to have happened is partly because of the fiasco of the Building Schools for the Future programme. It has been reported that Ministers felt let down by the Civil Service in the way the initial announcement took place, as you are probably well aware. I speak to Ministers and they will say that they are not discussing certain things in front of other people, partly because they fear leaks from the Civil Service. Is it not the case that there is a lack of trust and that this Steve Hilton stuff, and even what Tony Blair has been saying, suggests that political Ministers believe the Civil Service operates to a different agenda? The Department for Education side of things is a real example of that.

Dr Walton: All too often people are looking for conspiracy. I would go back to the point I made about the number of transactions going on. When I was in the Cabinet Office, in the Prime Minister’s Strategy Unit, on any one day we would be dealing with maybe 200 important e-mails. I would expect that maybe two or three transactions conducted were not done to the right standards or in the right manner. However, the motives of the people concerned would not necessarily be underhand; one is trying to uphold certain standards, although not always getting it right.

Going back to the key issue you are alluding to, of trust, I personally do not believe there is a "them and us" culture. I do not believe that senior civil servants or civil servants of any grade knowingly try to keep thing away from Ministers. There are occasions, and I have done it myself, when sometimes we would try to speed things up. In the Cabinet Office, in the Prime Minister’s Strategy Unit, we would sometimes try to speed up policymaking by using different mechanisms. Some could have alluded that we were not doing things according to the rules. We were; it was just that we were using different mechanisms. If you undertook a forensic analysis of a lot of what goes on in the Cabinet Office, or any other part of government, you could find that a proportion of that was not conducted according to some rule, statute, convention, policy or practice. I am seeing it from the perspective of the individuals. Everybody will have different views on this but I personally do not think that civil servants intentionally try to keep thing from Ministers. Or rather, if they keep things from Ministers, it is only with the best intention of moving the system along faster to get to the outcome everybody desires.

Q98 Chair: What are you saying here? Are you saying it is okay to keep things from a Minister if it is moving things along a bit faster; is that what you are saying?

Dr Walton: No, I am not saying that. I am saying that within the rules and framework that everybody operates to-often it is a framework, and not rules-I know from my experience in Cabinet Office that we were creative in policymaking. We worked within the rules but we were creative. In my experience, I never worked with anybody else, or myself, that knowingly kept things from Ministers. It is a question of how and when things are presented. The assumption, in my belief-and I am sure John will probably agree with this-is that, as a civil servant, you are trying to get the business done and you are trying to work with Ministers. You largely believe that Ministers are on the same page. You are trying to get things done, but sometimes you are slightly creative in the mechanisms you use.

Q99 Charlie Elphicke: If I understood you correctly, you seem to be saying that these kinds of conversations that happen in government between Ministers and special advisers should be subject to FOI. However, let us say you have your premeeting with the non-executives to discuss the running of the business and the strategic issues of the business. How would you feel if those discussions, where you were open and honest with your fellow nonexecutives, had to be handed over to the executive director so that they could see everything that had been said? How would that impact on the governance of your business?

Dr Walton: In that context, one is playing by the rules. The rules in many organisations are that nonexecs will have a private session, and the rules governing that session are that that is private to the nonexecs and the chairman, and the executive members of the board will not see that discussion. Within that context, that is what is accepted. That is a convention in that context.

Q100 Charlie Elphicke: Would you not concede that, in the political sphere, Ministers and special advisers need to be able to have discussions that are not shared with civil servants and everyone else? They need to be able to air issues, talk them through and seriously discuss things before going wider with them. They need that space, just as you need that space as a nonexecutive director in your business.

Dr Walton: Yes, I accept that, but the point is that we are talking about such large systems that it is very hard to have a rule and to apply that rule. The system is so large that even a single issue being discussed is going to have so many nuances and move so fast that it is very difficult to say that there should or should not be private space. It is going to be dependent upon every particular issue and how that issue is being played out. On any one particular day, the number of stakeholders that need to be involved in that issue will change.

Q101 Chair: What you seem to be saying is that the civil servants, when they find this is happening, should be distrustful of what is happening between Ministers and advisers, and should not respect that space.

Dr Walton: No, I am not saying that. I do think that, in the main, people will and should respect private space if it is needed. But whether it is needed is subjective. That is the difficulty. I do not think one can have a hard and fast rule. I think my colleagues will agree, from the roles that they hold, that even with companies that are nowhere near as large as the Civil Service, for the agreements on what is private space, what is FOIable, and what can be kept to the chairman, the rules are very difficult to apply. Issues take on a life of their own and then the number of stakeholders that need to be involved will change so rapidly that it is very difficult to have and uphold a single principle.

Professor Kakabadse: Can I support my two colleagues? Let us take the chairman-chief executive relationship and imagine that there is a leak on the board. The chairman and chief executive would have to seriously discuss this without the board’s presence, executive or nonexecutive. Where you draw the line is where you begin to position issues in a way that is detrimental to the board. In that sense both chairman and chief executive know it. I have been consultant to chairmen, and we have had discussions about the chief executive, and that is to clarify the issues in order to openly and transparently present them to the chief executive and the board. Everyone in that party, that game, knows exactly where the line is drawn between something that is an exploration, something that is called private time, something that is called clarification of issues and understanding and then, unfortunately, positioning issues to your favour against the board, the chief executive or the executive directors. I do not know the example that was drawn here, but you could go into detail and look exactly at what the Minister and adviser talked to each other about, what the issues were and whether those were private-time issues or positioning issues to the detriment of the Civil Service. I do not know that in this case, but if we talked to those individuals I am sure that we would find out. That is the discretion I believe my colleague is trying to highlight. The discretionary boundaries are broad, but I have never met an individual who does not know when they have crossed the line.

Q102 Mr Reed: There is clearly some frustration on the part of some Ministers, who appear to believe that the Civil Service is attempting to thwart them in their objectives. Picking up on some comments you made earlier, Professor Kakabadse, I wonder whether you believe that some of that is down to the lack of organisation or people leadership skills on the part of some Ministers themselves. I do not know whether or not they have been trained to have those but I would have thought that skills in that area-to be able to persuade and motivate a large and complex organisation to understand what you are trying to achieve and why, in order to get their hearts and minds in the same place as yours-would have been necessary to get the organisation to move where you want it to move. Is there a lack of organisation and people leadership skills on the part of some Ministers, and is there a need for more training and support in that area?

Professor Kakabadse: Certainly the study that I did indicated that, and certainly the training that is required indicated that as well. I believe there is also a question as to whether Ministers do really want that sort of strategic leadership organisational role or whether they should even have it. The Minister’s job is broad. Ministers are under immense pressure and to now add chief executive responsibilities to the Ministerial role, and then on top of that make them chairman of a governance structure that many of them do not turn up to chair, is asking too much. What we have here is, first, a confusion about what a Minister can actually do; they are human. Secondly, you also have a structural problem within the Civil Service where the role of the Permanent Secretary is continuously being eroded. The culture of care and service is being eroded as well. So we have two problems.

Q103 Mr Reed: There is an ongoing issue in any democratic institution, compared to the private sector, as it has dual leadership, to an extent. There is the Civil Service head and the political head. How do we accommodate those two together so the organisation sees clear, unified and cohesive leadership, both strategically and operationally, given that we are not going to be able to dispense with one or other of those?

Professor Kakabadse: If we take, as a private sector example, the roles of chairman and chief executive, there is a body of knowledge that says, "This is the role of chairman and that is the role of chief executive". All my studies indicate that that is not the case. The role of chairman in one company can be completely different to the role of chairman in another company, and yet the same person is in both roles. The roles of chairman and chief executive are negotiated in relation to what you are trying to do, in relation to the strategy you are trying to pursue, and in relation to the reality of the department or organisation that you are managing at that point in time. The intimacy of relationship between Minister and Permanent Secretary is a prime requirement. As far as I can see, the skill on both sides is there. What we are now having are organisational problems that are basically blocking the application of that skill. I have seen that deterioration over the last 10 to 15 years. It looks as if we have skill problems and training problems. We do have that, but underneath that we have fundamental structural concerns. Until we deal with those we are not going to be dealing with training and improvement on a personal level.

Q104 Kelvin Hopkins: Sir John, I really enjoyed reading your written evidence, I must say. It supported some of the thoughts I have had over many years. This Committee visited the Scottish Parliament in a previous Parliament, which was quite illuminating. You say that the quality of partnership between Ministers and their civil servants in Scotland has been better than is generally the case in Whitehall. Can you say why you think this is the case?

Sir John Elvidge: The simplest point to make is that, in my experience, all the sets of Ministers in the postdevolution period in Scotland wanted the relationship to work. It was a high priority for them that the relationship should work. That was partly because, at the beginning, they were very conscious that they were trying to make an entirely new political system work and a system that had coalition government at its heart. They understood that it was challenging, in the British context, to evolve a successful practice of coalition government. They took the view that when you were addressing major political challenges of that kind, it was sensible to want the ministerial-Civil Service relationship to work. Then their successors were faced with the equally challenging problem of minority government, with only 36% of the seats in the Parliament. They too had enough political challenges to worry about, without wanting to add to the difficulties by complicating the relationship between Ministers and the Civil Service.

It sounds like a simple point, but in all relationships, wanting the relationship to work will take you quite a long way into constructing a successful relationship, because it leads you directly to the kind of successful negotiation of roles that Professor Kakabadse was talking about. There needs to be the desire to have that discussion and reach an effective and mutually supportive conclusion to it.

There is perhaps also a sense in Scotland that some of the debates about accountability, which I see in a Whitehall context, feel different in Scotland. It is probably one of the consequences of a smaller polity. The idea that either Ministers or senior civil servants can somehow evade accountability simply does not feel like a convincing proposition in Scotland.

Q105 Kelvin Hopkins: One point that arose during our meeting in Scotland was when we met a committee of MSPs of various parties. A point was made that was very strong. One of them said that in Scotland all the political parties are broadly social democratic in their ideology. Even the Conservatives were required to be social democratic, in a sense, in Scotland, and they could not escape from that because of the political pressures from the electorate. Therefore, the drive to neoliberal ideology was less strong. By contrast-I make this point myself-in the British Parliament and in Whitehall we have seen successive Governments, Labour and Conservative, committed to this drive for neoliberal economics and a more privatised economy. The civil servants have been uneasy with this because of the era in which many of them were brought up in. I characterise them as hovering between social democracy and onenation conservatism. They are ill at ease with the drive for privatisation and neoliberal economics. That is very different. There is a natural conflict built into Whitehall relationships which is not the case in Scotland. This is political, and obviously I appreciate that you are a civil servant, but there it is.

Sir John Elvidge: It is a teensy bit political but I have to say, genuinely, that my experience of predevolution and postdevolution is that members of different political parties share more common ground than they like to think they do. It is true that there have been some ideological debates visible in an English context that have not gained much political traction in Scotland. I am not sure that that is what goes to the heart of these trust and respect issues between Ministers and civil servants. In the past, I have worked with colleagues in other parts of government who were doing certain things, and I would have had to work a little hard to put my professionalism on and ignore how I felt about the things that they were doing. I respected them for the professionalism with which they were able to do that. I never saw evidence that their professionalism stopped at a particular ideological boundary.

Q106 Kelvin Hopkins: Last week, in our previous session, Lord Hennessy talked about an uncomfortable marriage in British government. I think there are probably irreconcilable differences. In that situation, one side has to give way in the end. Rather than being coherent and working together, in a mutually respectful way, there is a constant tension and conflict in British government. It began with the Thatcher era and the almost revolutionary change away from postwar social democracy towards this neoliberal model, as Britain has been attempting to achieve. Mrs Thatcher wanted to appoint people who were more ideologically amenable and talked about them being "one of us". Then Tony Blair in particular used special advisers not just for this privatespace discussion, which is absolutely right, but actually to try to manage the Civil Service-I would use the word "commissars". When you try to force through political change you need people who are politically on your side, to bend the administrative machine to your will. That is what the Blair regime looked like. That is completely different from Scotland.

Sir John Elvidge: I am not sure. In order to let others have a go, can I make two points very quickly? If one takes that marriage analogy, we need to remember that, democratically, there can ultimately only be one dominant partner in that relationship. In that twoway relationship Ministers have a clear foundation for being, in the final analysis, the dominant partner in the partnership. That does not mean that relationships work better without trust and respect in them. The fact that one partner has the right to the upper hand does not mean the relationship works better if you allow respect and trust to slide.

The other thing I would say is that the problem with the marriage analogy is that it assumes that this is a discussion wholly between Ministers and civil servants. It ignores the fact that there is an important third element in the relationships: the citizens that both serve. As Professor Kakabadse was suggesting, we get to better solutions if we think about the formation of a partnership to make the relationship with that vital third party, the citizen, work effectively.

Q107 Kelvin Hopkins: I agree with you absolutely. My view of what has happened over the last decade is that we have seen increasingly wilful Governments trying to drive through a view of the world and a way the world should be organised, to drive it down to the citizen, rather than reflecting what citizens want. The problem for the citizens is that they have had this choice between two parties, both with the same ideology, so they do not really have much of a choice.

Sir John Elvidge: By instinct I am a bottom-upper rather than a top-downer. Democracy is our mechanism for bottomup power. It has its limitations.

Q108 Paul Flynn: David Kennedy was selected in the usual way for a job as the Permanent Secretary at the Department of Energy and Climate Change, in a committee that was chaired by Sir Bob Kerslake. He had the full confidence and approval of the Secretary of State, Ed Davey, but he was then vetoed by the Prime Minister. We have heard Francis Maude saying that he wanted more involvement of Ministers in the choices of Permanent Secretaries. Under this Government, of 20 Permanent Secretaries 18 have changed. Do you think it would improve the quality of government if politicians-Ministers-had more control over the appointment of Permanent Secretaries?

Dr Walton: Definitely not. There cannot be politicisation of key Civil Service appointments. It undermines the values of the Civil Service. There are arguments on both sides, but I do not think many senior civil servants or former senior civil servants could actually agree that it is acceptable to have ministerial right of veto. There will always be exceptional circumstances. It is highly unlikely in the selection service we have, but let us say that a factor in somebody’s background came to light that had not come to light, then in those circumstances, yes. But with the selection system we have, that would not be the case. The current system we have is, to some degree, a compromise because politicians do see the shortlist, so they do have some input. I personally support that system. I do not like to use the word "interference" but I do not think we should have a greater role given to politicians in the selection of senior civil servants than that.

Q109 Paul Flynn: You mentioned in some of your earlier answers the value of a memory, which is more likely, perhaps, with civil servants than with politicians. Do you see the value in the Civil Service making sure that there is stability and moderation in government, rather than falling to some of the eccentricities of political parties that are here today and gone tomorrow?

Dr Walton: We do need a very strong corporate memory. We do not have it. We have too many units that come and go. There is no capacity. Obviously you are moving the debate beyond selection decisions to mechanisms of government. Within the machinery of Whitehall there is no corporate memory and yes, I believe there should be a stronger corporate memory. There have been attempts to introduce it but as you can see, and as has been alluded to within this Committee, the actual reform document we had before us was not written with the benefit of corporate memory. It restates arguments made, to some degree better, in the past. So we do not have an acceptable corporate memory within the Civil Service.

Q110 Paul Flynn: The current doctrine is that civil servants are responsible to Ministers and Ministers are responsible to Parliament. Last week we had the senior civil servant here being responsible to Parliament in a remarkable and very revealing session of this Committee. Do you think it is desirable that civil servants should become directly answerable to Parliament?

Dr Walton: That is a difficult question because, to some degree, I believe that civil servants are answerable to Parliament, ultimately.

Paul Flynn: Do you mean directly so?

Q111 Chair: On this question of the appointment of senior civil servants, do our other witnesses have anything to say?

Professor Kakabadse: I have just one point. I totally agree with Dr Walton. There is a fine line between interference and involvement. I have seen a nonexecutive chairman become involved in the appointment of an executive director below the role of chief executive officer. That could be seen as interference. However, this nonexecutive chairman, paid two days a week, was in the company four days a week and was directly involved and also being held accountable not only for the appointment but how that appointment evolved and the reason for that appointment. So, are there exceptions where a more senior person can get involved in a role and say, "For me, this does not feel quite right"? Yes there are, but you then live by that decision, work with that decision and make that decision happen. I did not see that in this particular case. Interference is a major concern. Involvement is a skill and I did not see that skill in this case.

Sir John Elvidge: I can think of historical parallels; this is not the first time this has happened. The case illustrates that we do have a system in which there is a considerable degree of political influence over outcomes. I think it is absolutely right that there should be a bit of the system that enables a Minister to say, "I could not work with that person", or ultimately, "I do not have confidence that you have found someone with the right skill set to undertake this job". The crucial line is whether one goes further and says that Ministers should be able to pick the individual that they wish to occupy a particular role. That line is important because at the moment you have what I would describe as twin pillars of legitimacy in government. You have political legitimacy and you have professionalism assessed objectively. From the perspective of my third party, the citizen, that means that you have two foundations of confidence in the structure of government. If you cross the line to the point where Ministers pick the people who are selected for appointment, then you have extended democratic legitimacy into what was previously a second pillar, and you have conflated two pillars into one. It seems to me that the risk you run is that you narrow the base on which public confidence in government rests. That is a risk that is, in many ways, ultimately greater for politicians than it is for civil servants.

Q112 Paul Flynn: Finally, Dr Walton, you said that civil servants have always been responsible to Parliament. Do you recognise that they have never been so directly responsible to Parliament as they are now, because the growing strength of Select Committees-

Chair: You are slightly stealing your colleague’s question.

Paul Flynn: Am I? Sorry, I was just dealing with what Dr Walton said.

Chair: Finish it off.

Paul Flynn: Do you recognise that civil servants are more directly responsible now to Select Committees, who have a different role, removed from the party political circus in the Chamber, in a way that has never happened before?

Dr Walton: I will answer that very briefly, because I know the Chairman wants to move on. You are saying that there is greater accountability and asking whether civil servants realise that. When I was a civil servant I always felt very accountable, albeit not directly. It was always through somebody, but I always felt that everything I did was accountable, even if I did not have to come in front of a Select Committee. I think most civil servants would feel, and have always felt, that there is a lot of accountability.

Chair: We have talked quite a bit about the feeling of accountability, the way that makes people behave and how that feeds into the trust issue. We are exercised on that subject.

Q113 Mr Reed: I was going to ask about departmental boards. The Government have sought to strengthen departmental boards and to bring in private sector expertise as an integral part of those. How well do you think the departmental board system is currently working?

Dr Walton: It would be nice to see some evidence. I think Lord Browne has brought at least 59 nonexecutive directors in and that has only been in place for approximately a year. I do not think there has been much evidence in the public domain as to how the new boards are working. I personally would be extremely interested, because it completely changes the Government’s mechanisms within Whitehall Departments, which we were calling for years ago in the Strategy Unit. I am really surprised there is not more in the public domain yet that has evaluated or audited that.

Q114 Mr Reed: Professor Kakabadse, you have gone on record exhibiting some scepticism about how this model was going to work. What is your view currently?

Professor Kakabadse: Deep scepticism. I do not think it is working. Take the 59 roles: how quickly were those 59 roles appointed? If you take any private sector organisation, most would probably hire search consultants to try to get the fit between the role and the person. The role would have some sort of boundaries put around it, whether the skills or requirements were more to do with finance, corporate social responsibility or risk. What I saw was mateship. I just saw people’s mates being appointed to these boards. If you then start looking at some of my studies, what is seen on a Civil Service board as best practice is seen as worst practice in the private sector-namely, that the uncomfortable issue coming to the surface and being discussed openly is killed. If you went round to some of the organisations that work with government, you would find that the reports are written and have been deliberately kept from the public. I have seen some of them and they have been hidden.

Before the Lord Browne initiative started there were studies conducted about how badly some of the Civil Service boards were operating and what the nonexecutive private sector director experience was of sitting on those boards. I think the situation has got much worse. The issue that we have should be brought into the public. There should be an independent investigation conducted about how these people were appointed, why they were appointed, for what roles they were appointed, what the reality of the chairmanship skills that apply are and how those boards work. Do many of those nonexecutives even understand what is happening in some of those Departments, except for those who have been civil servants beforehand? Of the ones I have spoken to, their greatest concern when they talk to me is, "I don’t know what my role is, I don’t know what I’m doing here and I don’t know if I’m providing any value. This really has to be discussed openly.

Dr Gibson-Smith: It seems to me that there is a profound difference between the responsibility of an individual on a private sector board and someone on a Civil Service board. That difference is enshrined in law and duty. There are a very clear set of dictums, standards, objectives and behavioural expectations on a private sector board, which are then comingled with maybe 30 or 40 years of extensive skills and training in the very narrow discipline of private sector administration. So you end up with contribution, participation and competency with absolute clarity of your boundaries, responsibilities and duties. You are invited to participate as the chairman of the audit committee, or the chairman of the remuneration committee. Very little of those characteristics is transferred to the public sector context. In fact they are excluded or precluded precisely because they would infringe Ministers’ responsibilities. So you start with the fact that they are not much alike at all.

Q115 Mr Reed: Are there things that can be brought from the private sector experience of some of these people that would be of benefit on a board if it were properly harnessed?

Sir John Elvidge: Can I try to answer that? As Dr Walton said, the use of private sector nonexecutives on departmental boards did not start with the most recent round of initiatives. Actually we have a length of experience here. Throughout my postdevolution experience in Scotland we had three nonexecutives, all drawn from the private sector. I have no doubt that we got a valuable contribution from them. That is because we attempted at the outset to address the questions that Chris Gibson-Smith has so rightly identified, such as, what were the boundaries of the role they could legitimately occupy without intruding into the proper responsibilities of Ministers? They could help us run the business using the expertise that they brought. They could give us a wider perspective on HR policy or IT policy-things that are common to all large organisations. The non-executives I worked with always accepted that they could not intrude into the core business of the organisation or the political territory that was rightfully that of Ministers.

Q116 Chair: That sounds rather like shutting them out.

Sir John Elvidge: No, I think it is-

Chair: They have no power and no fiduciary duty. They are there purely in a mentoring role. Unless they are positively involved by Ministers and departmental officials they will be left doing very little at all. Isn’t that what is happening?

Sir John Elvidge: Not in my own experience. It seems to me that they did not feel shut out because they, in essence, took the same view as Chris Gibson-Smith: that one needed to start with some workable boundaries on what they were there for and what they were not. They were not excluded from knowledge about the business. Full and frank discussions went on in front of them. It was just that they understood that they could never intrude into the territory where Ministers were rightly directing the Department, because they had no legitimacy to do so. However, they played a very active role in supplementing the business. They were more than mentors. For example, my nonexecutives constituted my remuneration committee to decide on rewards throughout the senior Civil Service. One of my nonexecutives chaired the audit committee to provide precisely the kind of challenge from a nonexecutive capacity that one would find in other board settings. So I think that it is not right to suggest that, by defining that territory, one is somehow excluding them from a useful contribution.

Professor Kakabadse: The whole point of having non-executive directors and the whole point of having a board is that you have independent parties to examine the governance of the enterprise. The governance has two sides to it: monitoring and mentoring. For mentoring, yes, you do have to become sufficiently intimate with the organisation to understand the challenges and concerns the line management have and the problems the Permanent Secretary-or chief executive, in the private sector-has, and at least then be able to understand the input you make, what relevance it has and what impact it will have on that organisation. The monitoring side is about asking the hard questions. Asking the hard questions is what I am detecting is not happening. Mentoring is, yes, but we have nonexecutive directors who are more like social workers: "We are here to look after you and make you feel better".

There is also the bit about what the role of Secretary of State as chairman actually is, what its boundary is and its relevance to this Department on this strategy, in this year, right now-not in principle, but in how the line is drawn now. In the private sector, I do not know of any nonexecutive who would not at least be tempted to ask those questions. Equally, it is important to say that in the private sector there is a wide variety of skills in practice. For one nonexecutive sitting on one board, going to another board almost feels like a completely different experience. I wish we had that wide variety of practice at both ends in this case. I do understand, Sir John, that there are certain boards that do work well, but that is usually because of the personalities that are unique and idiosyncratic to that board. As a practice I am not seeing the monitoring side or the hard questionasking side taking place; all I am seeing is nice conversations, pleasant people and that is it.

Q117 Priti Patel: You have already provided an interesting analogy on the level of monitoring that is or is not taking place. Specific to the Civil Service, do you sense that there is an opportunity for them to upskill themselves in this particular area? This is about governance and understanding governance. You have already highlighted two ways. What else could be done to get them in that space so that they actually understand what the role is and can support the Secretary of State and ministerial team accordingly, to make sure everybody is working at-dare I say-the high level that one would expect at a board level in a private company?

Professor Kakabadse: Taking the private sector as a guide, and it is only a guide, you can introduce onto any board any structure, reform or changes of role but if you have bad chairmanship it is for nothing. My critical question here is the chairmanship of these boards, and the reality is about how that chairmanship is intimately involved with the work of the board, understands that, and also understands the roles of nonexecutive directors on that board, in order to meet the priorities that we have now. It is a very dynamic and active situation. So first, I would look at the reality of how chairmanship is applied.

Secondly, the public servants and private sector nonexecutives I know are skilled people. They do understand these issues; we do not have a skill problem here. We have a situation where we are not using the skills that are brought on to this board.

The third thing is that, I have to say, there is mateship. Why were many of these people brought onto these boards? What transparent diligence was undertaken to fit role with person, bearing in mind what that Department may be going through in the future? We may make mistakes but I did not see that clever diligence or clever understanding taking place of how we fit skills to roles to challenge. Until we go through that process we do not even know whether we have good people on a board, but we do not need them for this board. So there are concerns here but it starts with chairmanship.

Chair: It sounds like an inquiry all on its own. Mr Flynn, I owe you an apology.

Paul Flynn: That is alright.

Chair: Are you happy?

Paul Flynn: Entirely, as always. I am in a permanent state of happiness on this Committee.

Q118 Chair: Does the panel wish to say anything further about accountability?

Dr Walton: I would like to come in there and link the last two questions. Chairman, you alluded to the fact that the nonexecutives have no fiduciary duties on Whitehall boards, which of course they do not. However, any nonexecutive on any board has to keep an organisation safe, solvent, strategic and compliant. Whether or not you are bound by fiduciary duties because you are in a listed company, you know as a nonexecutive director what your responsibilities are. My firm belief is that if these NEDs have been brought on boards appropriately and are good NEDs, they know what their responsibilities are and they should be discharging them. But yes, I think they can be upskilled. The role of a good NED is such that it is very difficult to do your job well. There is no public accountability at the moment of these 59 NEDs, so we do not know. I, and the Institute of Directors, actually put a challenge to Lord Browne and co, and asked how many were chartered directors, as chartered director is the only professional qualification for directors. We were told that there were no professionally qualified chartered directors but there would likely be before the end of the process. We have got to the end of the 59 and I believe that there are not. That does not matter; you do not have to be a chartered director to be good at your job, but it helps. However, we do not know who these 59 are. If they are good, strong, solid NEDs they should be doing a good job because they understand their responsibilities.

Q119 Chair: On the question of accountability, civil servants are, in theory, accountable solely to Ministers. In practice they are also accountable to Parliament, particularly accounting officers. Certainly, for accounting for fact and administrative detail, they are directly accountable to Parliament. Thirdly, they are, in a broader sense, accountable for the fiduciary good practice of the system, for the process of government and for the broader constitutional stability of the system. How do Ministers cope with the divided feeling of accountability that civil servants have to balance? When Ministers cannot get things done, they get very angry.

Sir John Elvidge: You talked earlier about our use of the words, "felt accountability". In my experience, Ministers do not much feel that division of accountability. They know it is there but, in my experience, Ministers often do not feel it impinging on the relationship. After all, the crystallisation of that into the seeking of ministerial directions is a pretty rare event.

Q120 Chair: But if Ministers do not feel or understand how their civil servants feel, there is not going to be much of a relationship between Ministers and civil servants. Is that the problem?

Sir John Elvidge: Provided Ministers understand that it is there and that there is an accountability that their Permanent Secretary has to fulfil, and they do not ask civil servants to do things that would be incompatible with their accountability to Parliament, then I am not sure that it need intrude hugely into the daytoday relationship between Ministers and civil servants. It is a check. It is a boundary measure to deal with issues that might cross a boundary that is quite a way out from normal daytoday practice.

Professor Kakabadse: From my experience and studies, there is a difference between what you might call political time and organisational time. Political time is what the Minister would want done within a certain time frame. That will be the time frame they have in Parliament or where they are elected to meet their political agenda. Organisational time is actually doing it. Doing it takes much longer. That is a tension that is everywhere. I do not see that as a problem. The problem is the dialogue that needs to take place in order to reconcile what you might call political time and organisational time. There is going to be a time lapse between the two. What I am detecting is that that dialogue is being undermined. Sir John commented about the free and open conversations that we should have, and those are not being allowed to take place. That is the concern, not the fact that the Minister cannot get something done-that has been here for hundreds of years. It is about how we talk about how it is going to be done in this way for us right now.

Dr Gibson-Smith: I would like to reintroduce Mr Flynn’s point on stability in leadership decisions. It seems to me that two out of 17 surviving Permanent Secretaries after half a Parliament, or 12 Secretaries of State for Transport in 13 years, is completely incompatible with the objectives of good government.

Q121 Charlie Elphicke: I would like to ask a few questions on accountability. What accountability can there be if a Minister has no control over who his senior officials are?

Professor Kakabadse: The question was one of involvement. The Minister has to be involved in the selection of appropriate civil servants, and then where that boundary is drawn is part of the discussion. That is the uniqueness of our system. We have a political system and an administrative system coming together. The whole point is to try to prevent a politicisation of the system. It is a difficult boundary, I agree with you, but if you take on this role, this is one of the constraints we have. I do not see a concern there. What I do see as a concern is the conversations behind the scenes that equip the Minister to be able to exercise that accountability appropriately. That, for me, is the concern. I do not see that working well now.

Q122 Charlie Elphicke: We talk about independence as being a good thing. I would say that that is because people like to hark back to the NorthcoteTrevelyan reforms, which were great for the 19th century. How well does that really work in a globalised, fastpaced, internetenabled, 24hour-newscycle world where we have a governmental system that has the sense of urgency of the average garden snail? It is a joke. Should we not update it and actually enable Ministers to hire and fire civil servants, like they do in America, so you could actually push through the things the Government wants to get done?

Chair: I know what Sir John Elvidge is going to say, and I think I know what Dr Walton will say.

Charlie Elphicke: I would like to hear what the witnesses say. Can I ask Professor Kakabadse first?

Professor Kakabadse: If what you want is a transactional culture, where the task that you want done is going to be delivered and that is it, then what you are saying is fine. Where those transactional cultures work in the private sector is where you have an organisation where its competitive advantage is only costs. So the advantage is not quality, service or improvement but just continuous cost reduction. If you want to introduce that into the Civil Service and that is open and transparent, then by all means, let us have the debate. But is what you want in a 24hour internet world on a globalised scale a culture of trust, where incompatible elements of strategy are reconciled in a unique way for you, which really makes the difference? Every organisation I know has built a culture of trust. That culture of trust is dependent on how we make appointments, who is accountable and how we involve individuals. If you feel that a chairman today may be accountable to shareholders, the press and the media and has not been involved in the appointment of a number of executive directors, and is publicly held to account for that when something goes wrong, that is the parallel. Yet in these companies what happens is that the chairman is intimately involved and not directly responsible for that appointment. It works. It is the culture of trust you create, not the exact appointment you make, that is the problem. My concern is that the culture of trust is being eroded.

Dr Gibson-Smith: I support what Professor Kakabadse has just said, but you have a choice. It is profound, political and constitutional, but certainly not commercial or business. If you make the shift, you will change the culture, and you need to think very deeply through all the things Professor Kakabadse just said. It is in your power to do it, but it will have profound implications.

Q123 Chair: Sir John, I think you are itching to say something.

Sir John Elvidge: Yes, I have two things. Of course you can make the change. Plenty of other countries operate different systems from us. However, you cannot make that change in isolation from the rest of your system. You cannot plonk that one element down in a system that is built around a different construct. You have to make a system change. The other thing I would say is that, from my experience of working with other countries that do this, what happens is that you simply shift the boundary. Those appointees become regarded as a form of Minister. Indeed, in some countries, like Germany, that is quite explicit. So you simply shift the boundary along a stage. You do not eliminate the fact that in all complex organisations, leaders have to trust people whom they cannot control day to day and whom they may not personally have appointed.

Q124 Chair: So what you are saying is that to ditch NorthcoteTrevelyan is really a constitutional question that would require other constitutional changes as a consequence, such as the complete separation of powers and the strengthening of Parliament.

Sir John Elvidge: Yes indeed. To take one example that you have already alluded to, Chairman, you cannot really maintain our accounting officer concept if you move to this system, because if your Permanent Secretary is directly appointed by your Minister, the perceived credibility of that role as an independent servant of Parliament as well as of the Minister is very difficult to sustain. So you have to find a different mechanism for providing that kind of beforetheevent check on the propriety of the use of public funds.

Q125 Charlie Elphicke: Let me press you a bit harder on that, if I may, Sir John. What you have is a whole load of Governments that then build other structures in order to deal with the underlying problem. You had the Prime Minister’s Delivery Unit, which even the former Prime Minister Tony Blair admitted was basically a failure and did not really work very well. You have nonexecutive boards with this current Government, which is the latest fad. They are all dealing with the same issue, which is if a civil servant at a senior level does a rubbish job, they do not lose their job but just get moved somewhere else, or they just have to be put up with.

So you have this spectacle at the moment, which we see as Members of Parliament, where many of the private offices of junior Ministers are just dismal, because they have no control over who is in their private office, and we view many of the Permanent Secretaries in the senior echelons of the Civil Service as dismal. Ministers tell us in the Tea Room that they are incredibly frustrated but there is nothing they can do about it. There is no ability to say, "I am sorry; you are not doing a good job and you have to go," to concentrate the mind of officialdom. Dr Walton and her nonexecutives in RSA would be able to fire the chief executive or the finance director if they were not performing. Why can we not have that kind of accountability in our Civil Service?

Sir John Elvidge: I have three quick points. Firstly, if you think civil servants do not get effectively fired then you live in a different world from the one in which I do. I have seen plenty of civil servants exited, rather than simply moved from one place to another. Secondly, I would go back to my Scottish analogy. How is it that exactly the same systems do not produce a dismal set of Ministers in a second setting? Thirdly, the list of examples of measures to deal with the perceived problem, which you enumerate, have in common that they are all attempts to make organisational solutions to something that is not fundamentally an organisational problem. As we said earlier, it is a problem about trust, respect and the quality of relationships, not about the mechanisms that you use to put particular people in particular places.

Q126 Charlie Elphicke: I have a final question on accountability. You will all have seen the comments by Steve Hilton in a lecture in the States. Most of you will probably have seen a blog by Damien McBride where he said that his view was that Steve Hilton and co were not using the grid system that had been put together. First of all, do you recognise the picture painted on both sides about the grid system? Secondly, do you think the current Government have abandoned the grid system or not operated it properly and that Damien McBride has a point?

Sir John Elvidge: Do I think Damien McBride has a point? First of all, I think that anyone who expects that everything that happens in a system as large as the UK Government will be known in advance in No. 10 has what I would describe as a naive understanding of the complexity of government. That said, of course there should be mechanisms to ensure that No. 10 knows the things it needs to know. Actually, our systems of government have pretty complex mechanisms, of one kind or another, to try to make sure that No. 10 is not caught on the hop. I can tell you that it is not just an issue for No. 10. As Permanent Secretary I would sometimes pick up the newspaper and think, "Oh gosh, I did not know that was happening". That is simply an aspect of the dependence of leadership in complex organisations. Is Damien McBride right to say that systems that most people have found satisfactory were in place to provide the Prime Minister with the opportunity to intervene when he wanted to? Yes, he is right. It would be a travesty to assume that the Government do not devote considerable effort to those upward information flows.

Q127 Kelvin Hopkins: I have to say that, not for the first time, I take a very different view to my colleague, Mr Elphicke, here. Last week it was put to us that the essential principles of NorthcoteTrevelyan were very valuable and should be retained. I agree with that view. I must say that I am not alone in not wanting to live in a world run by G4S, Starbucks, Vodafone and the six private energy corporations.

Chair: And Google.

Kelvin Hopkins: Yes, and Google. Having government, a state and a sense of social commitment is important in society, and just leaving everything to the private sector and privatisers would be a complete disaster socially and politically and would not be acceptable to most people. One of the reasons why we have this constant change of Permanent Secretaries is perhaps because governments are wilful in trying to force through this revolution. A classic revolutionary tactic is churn-permanent revolution, constantly keeping people off balance and changing all the time. If you keep change up, nobody gets experience, nobody builds confidence and one cannot run things any more. The best example of this was the west coast main line fiasco, where civil servants were juggled about and we finished up with a disaster because nobody had any experience, because those with necessary experience had all disappeared.

Chair: What lesson does the panel take from the west coast main line fiasco?

Professor Kakabadse: I am not familiar with that particular case but certainly the point you are making about rapid movement of senior leaders in the Civil Service having a bad effect on the organisation is absolutely true. You do need people to be in post for at least three, four or five years to bed something down. You were talking yourself about what it takes to introduce change. Why that has happened is something that, by all means, we could examine. Is it bad practice? Yes it is.

Dr Gibson-Smith: I am not going to deal with the west coast situation-apologies-but on the same point, if you were to ask me to recommend one single thing, I would start with stability of leadership.

Q128 Chair: Do our other two panellists concur-stability of leadership?

Dr Walton: Yes.

Sir John Elvidge: Yes.

Chair: It sounds a bit like status quo to me.

Sir John Elvidge: We have suggested that current evidence suggests that it is anything but the status quo. The evidence of instability is striking at the moment.

Q129 Chair: We must draw to a close but, very briefly, what is it, in a nutshell, that you think the Civil Service can best learn from the private sector?

Professor Kakabadse: From what I have seen of highperforming companies, what the Civil Service can learn is what it takes to produce a culture that is unique to you and that delivers the service and quality that your citizens want. What the private sector does, in its bestperforming companies, is take some indication of what other companies, but not take examples. They work out their own culture to deal with their own problems in their own way. My desire is for that to happen here. I do not see poorperforming civil servants. Like Sir John, I see those poorperforming civil servants dealt with. I see civil servants that are not being allowed to perform.

Dr Walton: Obviously I, in the main, support civil servants, but none the less I did leave the Civil Service in order to become the kind of leader I felt I could not be within the Civil Service. So I defend civil servants in the main but I do think that, from the private sector, one can learn better corporate governance. We may have it-I do not know, because we have not had the audit of the NEDs on the new boards-but one can get a certain courage, passion and determination for corporate governance from the private sector. Civil servants do their best, but they do not do it with the energy and they do not understand accountability in the same way that the private sector does. Some of those notions of true leadership and accountability with no way out we can learn from the private sector. Perhaps we have learned those lessons but we do not know that without a thorough audit of the boards.

Q130 Chair: Dr Gibson-Smith, you had this tremendous challenge of moving from the private sector to a privatising industry that had to be turned around very rapidly. You were exposed to every aspect of this. What do you think the limits are that the public sector can learn from the private sector?

Dr Gibson-Smith: The two things you can see in the private sector that are central to its capability are, first, sustained and aligned leadership at the top of an organisation-that is fundamental-and secondary to that, the constant upgrade of skills of every person within the organisation is then fundamental to maintaining the capability. Beyond those two things, there are profound differences between the role of government and the role of the private sector, so one has to choose with great care.

Q131 Chair: Inevitably, I find that our discussion always comes back to leadership, trust and governance. Before we end the session, are there any particular points from your own evidence that we have not covered in this oral session?

Sir John Elvidge: Can I just briefly say something? If I had answered your last question, my answer would have been "corporacy"-a greater sense of shared purpose and less fragmentation in government.

Q132 Chair: Does that mean there needs to be some organisational tidyingup at the top of government to create more coherent leadership?

Sir John Elvidge: My own view is that there needs to be some role redefinition. I am always attracted towards the territory that Professor Kakabadse has outlined about the importance of clarity around the roles you are asking people to fulfil. In the UK Government, we have too much of an imbalance towards fragmentation of responsibilities and an insufficient weight of corporate and collective responsibility, particularly moving into the strategic policy area. I think that we need to accentuate the shared responsibilities of our leadership of the Civil Service.

Dr Gibson-Smith: My NATS experience, which was intense, profound and ultimately personally rewarding, was that actually, with sustained effort, you can blend private sector skills with public sector capability-the NATS public sector capability is extraordinary in world terms-and produce something better from that blend.

Chair: On that very positive note, I thank you all very much indeed for coming before us today. It has been absolutely fascinating. I have certainly enjoyed it and I hope you will look forward to our report.

Prepared 12th February 2013